Where next for the Watches Of Switzerland share price?

Where next for the Watches Of Switzerland share price?

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Shares in Watches Of Switzerland (LON:WOSG) are currently trading at 1,155p but a key question for investors is how economic uncertainty might affect the price in the months to come.

The answer comes down to judging whether Watches Of Switzerland is well placed to withstand economic shocks. To do that, it's worth looking at the profile of the stock to see where its strengths are.

Promisingly, it appears to score well against some important financial and technical measures. In particular, it has at least some exposure to two influential drivers of investment returns: high quality and strong momentum.

Decades of research shows that good quality stocks are more likely to be resilient, cash-generating businesses that can compound investment returns over time. Likewise, research suggests that positive trends in price and earnings can persist.

Why quality stocks can pay off

When it comes to stock analysis, company quality tends to be revealed in high profitability and strong industry-leading margins. These kinds of firms are stable, growing and often have accelerating sales and earnings. They also have strong and improving financial histories with no obvious signs of accountancy or bankruptcy risk.

One of the quality metrics for Watches Of Switzerland is its 5-year Return on Capital Employed, which is 10.5%. Long-term, double-digit ROCEs can be a hallmark of companies with the power to grow very profitably.

Harnessing the power of momentum

Positive momentum trends show up in share prices and earnings growth. You can find the clues in stocks that are trading close to their 52 week high prices and outperforming the market. They’ll often be beating broker estimates and getting forecast upgrades and recommendation changes.

This is true at Watches Of Switzerland, where the share price has seen a 54.9% return relative to the market over the past 12 months. Market volatility and economic uncertainty can be a major drag on momentum, but previously strong stocks can be quick to recover when confidence returns.

In summary, good quality and momentum are pointers to some of the best stocks on the strongest uptrends. This combination of factors can be a clue to finding shares that can deliver solid investment profits over many years.

In good times, these shares can become expensive to buy. But in volatile markets, there may be chances to buy them at cheaper prices.


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Watches of Switzerland's StockRank™

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Watches of Switzerland's StockRank™

With a StockRank of 54, Watches of Switzerland is more attractive than 54% of the 7,654 stocks we cover in Europe, according to our proprietary ranking system.

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